Though a booming real estate market sparked the upgrade wave in the Keys, a cold housing market may help reverse the tide.

Developers planned to finance the majority of the new resorts with condominium sales, but demand for the pricey units has gone south.

The owners of Holiday Isle, the iconic bar and motel in Islamorada, decided after only two months of sales to suspend plans for a condo-hotel complex there called Ocanos. The developers say Holiday Isle still will be demolished to make way for a five-star resort. But the financial picture certainly gets more challenging without the condo-hotel windfall to offset the $98 million purchase price.

Other developers are having second thoughts, too.

”All I’m seeing are projects getting canceled right now,” said Robert Boykin, whose Cleveland company Boykin Management was to convert Marathon’s Banana Bay motel into a condo-hotel resort.

That still might happen, but Boykin said the real estate market may prompt the company just to build a traditional hotel there instead. ”Our view is pretty optimistic about the Keys, and Florida in general,” he said. “We’re just going through a market digestion problem right now.”

Nearby, at the Coconut Cay motel, owner Jim Rhyne had envisioned converting all 66 rooms into condo-hotel suites. ”We didn’t get started on it, thank goodness,” he said.

Information from: www.miamiherald.com

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